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Three Seas Initiative member states requiring almost 600 bln euros in infrastructure modernization investments

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The investment needs for the modernization of the transport, energy and digital infrastructure in the 12 countries of the Three Seas Initiative (3SI) amount to almost 600 billion euros, while the EU budget for this type of investments in the region is 42 billion euros for the period 2021 - 2027, said Pawel Nierada, member of the Three Seas Initiative Investment Fund Oversight Council on behalf of the Polish bank BGK, citing a survey by consulting company SpotData.

The chair of the Fund's Oversight Council, Beata Daszynska-Muzyczka, who is also CEO of the Polish bank BGK, told Agerpres on Thursday that in order to have their financing needs met, the member states of the Three Seas Initiative should speak in one voice before the European financial institutions.

Daszynska-Muzyczka also said that the EU will fail if it does not modernize the energy and transport infrastructure of the 3SI states and that the latter should approach the European Investment Bank (EIB) through the Three Seas Initiative Investment Fund. In this regard, she said that each of the 12 3SI member countries should invite the EIB to take part in the initiatives of the Investment Fund.

The Three Seas Initiative Investment Fund will finance energy, transport or digitization projects in the 12 member states that will connect at least two countries, said the chair of the Fund's Oversight Council.

This region presents extraordinary infrastructure creation opportunities, compared to the infrastructure that already exists in Western Europe. I think the fund will grow by another 1 billion euros next year, said Beata Daszynska-Muzyczka.

Pawel Nierada explained that the purpose is for the funded projects to have an impact on several countries in the area.

The most important reason why we want the Fund's activity to succeed is because we want to subsequently attract even more capital. We do not want to compete with the European funds for infrastructure, nor with the national ones, our aim is to bring even more money to the region, Nierada said.

Albu (EximBank), about 3SI Investment Fund: Return on investment will probably be double-digit

The return on investment for the projects to be financed through the Investment Fund of the Three Seas Initiative (3SI) will probably be double-digit, stated on Thursday Nicolae Albu, member of the Fund's Supervisory Board.

"We have to take into account the fact that these investments are primarily in a region more risky than the developed markets, as concerns Romania, we are talking about a developing market or even a border market, and we also have to consider the risk, the infrastructure, the asset class, so that the yield must offset all the risks in this field, so it will probably be a double-digit return," said the EximBank representative from the Supervisory Board of the Investment Fund of 3SI.

Another member of the Supervisory Board, Pawel Nierada, representing the Polish Bank Gospodarstwa Krajowego (BGK), compared the percentage of investment return that can be reached in this investment fund with the yields of the infrastructure investments from his own bank, indicating that there is a return of 8 percent.

It is possible to see an investment return of more than 8 percent, said Pawel Nierada.

EximBank representative Nicolae Albu appreciated that Romania is willing to increase, in the future, the initial financial contribution to this fund and added, for AGERPRES, that projects involving Romania and which will be submitted to the fund for financing must ensure the minimum return on risk.

The EximBank representative in the Supervisory Board of the fund stressed that Romania's projects have the advantage of receiving technical assistance from the EIB and the EBRD.

The representative of the Polish BGK within the Supervisory Board of the fund, Pawel Nierada, explained that Romania will be able to benefit from project financing from this fund depending on how quickly it will propose viable projects for financing.

There is much interest from American investors for Three Seas Initiative Investment Fund

Investors in the United States show much interest for the Investment Fund of the Three Seas Initiative, stated, on Thursday, for Agerpres, Pawel Nierada, member of the Oversight Council of the Fund on the part of Polish Bank BGK - one of the two initiators of the fund.

There is much interest on the part of investors from the USA. There was a big misunderstanding at the beginning, relating to certain persons in Brussels, and they saw this initiative as a majority American action, which is not the case. It's a national initiative, and we will speak with investors at the global level. In what regards American investors, it's very complicated because of the regulatory framework in the United States. We must be very careful at the way in which we approach American investors, there must be authorized organisms, but certainly we will attract all reputable money sources from the US, from Canada, Australia, Norway, Israel, South Korea and so forth, stated the representative of the Oversight Council of the Investment Fund of the Three Seas Initiative.

He rejected the possibility of collaborating, for the moment, with financiers from China.

The fund is open to other countries, to all development institutions in other countries, they can join when they are ready to do so. Today we have Poland, Romania, the Czech Republic and Latvia with representatives in the Oversight Council, and I can say that this team will extend soon in other countries, which will formally, officially, join the project. (...) We will bring even more money in the region by inviting to the fund investors from the outside, like the pension funds in Canada, South Korea, in Japan and other countries, which at the moment are not involved in our countries. This fund is a traditional one; established in Luxembourg, because there the procedures to establish such a fund are very simple and thus we've avoided contradictory discussions between members. The fund is managed by the company Fox Asset Management, which ensures the general oversight of asset management services and the fund has two portfolio managers, Credit Suisse and Amber Infrastructure Group, Pawel Nierada mentioned.

The Three Seas Initiative Investment Fund is a fund initiated in May 2019 by the governments of Poland and Romania, through the Polish bank BGK and Romania's EximBank, with the two having contributed a combined 500-plus million euros. The Fund is set to finance infrastructure, energy and digitization projects in the 3SI space - Romania, Poland, Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Slovakia and Slovenia.

The Chair of the Fund's Oversight Council explained that the Fund will work according to the market rules.

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Friday, November 29, 2019